A.G. Schneiderman: Report on national mortgage settlement shows progress for New York homeowners

by jmaloni

Press release

Mon, Nov 19th 2012 02:15 pm

Following the release of the first official report
on the implementation of the National Mortgage Settlement Monday, Attorney
General Eric T. Schneiderman indicated that he was encouraged by its progress
on behalf of New York state homeowners.

The report, which was issued by the
settlement's national monitor, Joseph Smith, showed that more than $625 million
in consumer relief has been delivered to New York homeowners since March of
this year. This figure is a conservative estimate that does not include
thousands of additional trial loan modifications and refinance offers pending
during the same period.

To date, 7,223 New York homeowners have received
assistance as a result of the settlement, with each borrower receiving an
average of $86,600 in the form of principal write-downs and other relief.

"The National Mortgage Settlement was a first step
in aiding homeowners who were impacted by the foreclosure crisis that devastated
communities across this state. While there are still too many homeowners who
are at-risk of foreclosure, today's report is encouraging and reflects
significant progress," Schneiderman
said. "Thousands of New Yorkers are receiving relief from their mortgage
servicers as a result of this settlement, but we must remain vigilant to ensure
all eligible New Yorkers are getting the help they deserve and that the banks
are being held accountable under the terms of the agreement."

As part of the settlement, the five largest
mortgage servicers have agreed to a $25 billion penalty under a joint
state-national settlement structure. A minimum of $17 billion goes directly to
borrowers nationally through a series of homeowner relief efforts, including
principal reduction. Servicers have also committed $3 billion to an underwater mortgage-refinancing
program for homeowners whose mortgages are worth more than the value of their
homes.

The National Mortgage Settlement is the largest
joint state-federal settlement in history and it is the result of a massive
civil law enforcement investigation and initiative by state attorneys general,
state banking regulators, and nearly a dozen federal agencies. The agreement
was with the nation's five largest servicers: Bank of America Corporation,
JPMorgan Chase & Co., Wells Fargo & Company, Citigroup, Inc., and Ally
Financial, Inc. (formerly GMAC). Collectively, the five banks service nearly 60
percent of the nation's mortgages.

The below figures represent the total consumer
relief to New York homeowners from March 1 to Sept. 30 of this year:

•Servicers
payments for release of second lien: $439,601 (45 borrowers)

•Deficiency
waivers: $10,189,305 (107 borrowers)

•REO properties
donated: $320,417 (3 borrowers)

•Total
consumer relief: $625,513,974

•Total number of New York borrowers
receiving relief: 7,223

•Average
amount of relief per borrower: $86,600

Despite the progress illustrated by the report, the
New York attorney general's office remains vigilant to ensure that mortgage
servicers live up to their responsibilities under the settlement, including
compliance with the servicing reforms contained in the agreement. Consumers
should file a complaint with the office of the attorney general if servicing
violations are encountered.

Last week, Schneiderman warned Wells Fargo to
reverse a new policy that temporarily suspended review of mortgage relief
applications from New York homeowners, many of whom are still struggling to
recover in the aftermath of Hurricane Sandy. Schneiderman informed Wells Fargo
that his office will not allow the bank to use the devastation inflicted by
Sandy to evade their obligations under the settlement. The attorney general
demanded the bank immediately rescind this policy and comply with its
obligations without interruption.

Schneiderman has made it a top priority of his
administration to hold accountable those whose misconduct led to the collapse
of the housing market- and to provide significant relief to homeowners. In the
state of New York, an average of 1 in 10 mortgages is at risk of foreclosure.
The approximate number of individuals living in homes that are either in
foreclosure or at risk of foreclosure (based on typical household size for each
distressed mortgage) exceeds the populations of Buffalo, Rochester and Syracuse
combined.

In addition to the hundreds of millions of dollars
in relief from lenders reflected in Monday's report, Schneiderman secured more
than $130 million in hard dollars for New Yorkers as part of the settlement. Of
this amount, Schneiderman launched the Homeowner Protection Program, a $60
million commitment over three years to fund housing counseling and legal
services for struggling New York homeowners. Throughout New York state, 34
legal services organizations and 59 housing counseling agencies will receive more
than $16.1 million this year to provide free foreclosure prevention services.
An additional $3.9 million has been allocated for training, technical assistance
and other support services to assist homeowners in foreclosure.

In January, Schneiderman was appointed by President
Obama to co-chair the residential mortgage-backed securities working group.
This joint investigation brings together the Department of Justice, HUD, the
Securities and Exchange Commission, the Consumer Financial Protection Bureau,
several state law enforcement officials, and other federal agencies to
investigate those responsible for misconduct contributing to the financial
crisis through the pooling and sale of residential mortgage-backed securities.
It builds upon ongoing state and federal investigations, while also launching
new ones.